Legal thoughts, since 2005.

Here is this week's Daily Record column. My past Daily Record articles can be accessed here.

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Survey says: Law firms should invest in business development and technology

Since the economic downturn in 2008, law firms of all sizes have struggled - and most have failed - to maintain profits at levels existing prior to the market’s near-collapse. During that same timeframe, technology has advanced at unprecedented rates, affecting all aspects of the practice of law and ushering in a new age where globalization and changes in practice models have radically altered client expectations.

Study after study has confirmed the permanency of this newfound reality. Unfortunately, in most cases, the repeated recommendations of legal industry experts regarding the changes law firms need to make in order to stay afloat in the midst of this new world order often fall on deaf ears. This very phenomenon was adeptly described in the recently released 2018 Report on the State of the Legal Market, issued by The Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute.

The authors explained that rather than adapt, law firm leaders often dig in their heels and stay the course, even if it’s a failing one: “The phenomenon of ‘consensual neglect’ seems a particularly apt description of the strategic posture of many (if not most) law firms in today’s rapidly changing market for legal services. Ignoring strong indicators that their old approaches – to managing legalwork processes, pricing, leverage, staffing, project management, technology, and clientrelationships – are no longer working, they choose to double down on their currentstrategies rather than risking the change that would be required to respond effectively to evolving market conditions.” This despite the fact that one of the key recommendations that the authors make (and many other experts have made in the past) centers around a concept that should be palatable to lawyers since it’s the very essence of what we do: providing good client service. In other words, according to the authors, it’s imperative to provide the type of legal representation that 21st century clients want, not what lawyers think they need: “To be successful in addressing the new market realities, however, it is essential for firms to listen carefully and respond proactively to the concerns of their clients. And those concerns – at least since 2008 – have been driven by consistent client demands for greater efficiency, predictability, and cost effectiveness in the delivery of legal services.”

With the advent of sites like Legal Zoom and the rise of alternative legal service providers, competition is increasing and legal clients have more options than ever before. Law firms that ignore client demands for change are doing so to the detriment of their bottom line.

That’s why, according to the Report, the law firms that proactively addressed client needs “by implementing alternative staffing strategies, pursuing flexible pricing models, adopting work process changes, making better use of innovative technologies, and the like,” exhibited a what the authors referred to as a “dynamic response” to the changing landscape, thus achieving a better success rate than their more static counterparts.

According to the authors, the size of the firm was irrelevant, and instead investment in two primary areas were indicators of success: business development and technology. “These differences in investments by dynamic firms in both business development and technology suggest a philosophy of active engagement that is also reflected in the details of the expenditures. Dynamic firms reported that increased expenses in business development were designed to facilitate more client interactions and direct client meetings, business development coaching for lawyers, and brand development. Dynamic firms said their technology investments were focused on improving workflow efficiency, as well as enhancing their ability to assess profitability and better analyze data.”

So whether your firm is large or small, the lessons to be learned are clear. Turning a blind eye to change is not an option. Listen to your clients and respond strategically to their expectations. Take steps to facilitate improved client communication and understanding, whether through the use of improved processes or technology. Business development is a necessity; ignore it at your peril. And, finally, invest in technology to improve your law firm’s efficiency and increase profitability. Your clients, and your law firm’s bottom line, will thank you.

Here is this week's Daily Record column. My past Daily Record articles can be accessed here.

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ABA on Client Confidentiality in the 21st Century

These days, news is shared in many ways, with online news outlets and social media sites contributing to the rapid - and sometimes viral - dissemination of information. Not surprisingly, details distributed online can sometimes trigger client confidentiality issues. For that reason, the American Bar Association’s Standing Committee on Ethics and Professional Responsibility (“Committee”) recently addressed the duty of client confidentiality owed to former clients when information about a client becomes “generally known” after being shared online and through other news channels.

In Opinion 479, the Committee considered an exception to the client confidentiality relating to former clients. Specifically the Committee examined the exception found in Model Rule 1.9(c)(1) that permits lawyers to use information that is “generally known” to a former client’s disadvantage despite lack of consent from the former client.

As the Committee explained, Model Rule 1.9(c)(1) provides that a lawyer shall not use information relating to a former client’s representation ‘to the disadvantage of the former client except as [the Model] Rules would permit or require with respect to a [current] client, or when the information has become generally known.”

The primary issue considered in this opinion revolved around defining the concept “generally known.” At the outset, the Committee explained that there was a distinction between “publicly available” and “generally known”: “Unless information has become widely recognized by the public (for example by having achieved public notoriety), or within the former client’s industry, profession, or trade, the fact that the information may have been discussed in open court, or may be available in court records, in public libraries, or in other public repositories does not, standing alone, mean that the information is generally known for Model Rule 1.9(c)(1) purposes.”

Next, the Committee acknowledged that modern technology has made its mark on this concept, explaining that information “may become widely recognized and thus generally known as a result of publicity through traditional media sources, such as newspapers, magazines, radio, or television; through publication on internet web sites; or through social media.”

Next the Committee provided insight into how information becomes generally known in the context of a client’s chosen career: “(I)nformation should be treated as generally known if it is announced, discussed, or identified in what reasonable members of the industry, profession, or trade would consider a leading print or online publication or other resource in the particular field. Information may be widely recognized within a former client’s industry, profession, or trade without being widely recognized by the public.”

The Committee explained that in that context, knowledge of the matter by the general public is irrelevant. The Committee offered the insurance industry as an example and indicated that what truly mattered was whether the information had been broadly disseminated in that industry: “For example, if a former client is in the insurance industry, information about the former client that is widely recognized by others in the insurance industry should be considered generally known within the meaning of Model Rule 1.9(c)(1) even if the public at large is unaware of the information.”

The Committee then summarized its analysis and conclusions as follows: “(I)nformation is generally known within the meaning of Model Rule 1.9(c)(1) if (a) it is widely recognized by members of the public in the relevant geographic area; or (b) it is widely recognized in the former client’s industry, profession, or trade.”

This opinion offers much-needed clarification for lawyers regarding client confidentiality issues in the digital age. The times are undoubtedly changing as the online world speeds up and amplifies the dissemination of information. Certainly the end result is that the internet may muddy the waters a bit when it comes to lawyers’ ethical obligations. But as this opinion shows, despite the rapid pace of change, lawyers’ ethical obligations nevertheless remain constant, whether applied online or offline.

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